The Stat5 transcription factors Stat5a and Stat5b have been implicated in lymphoid development and transformation. Most studies have employed Stat5a/b-deficient mice where gene targeting disrupted the first protein-coding exon, resulting in the expression of N-terminally truncated forms of Stat5a/b (Stat5a/b(DeltaN/DeltaN) mice). We have now reanalyzed lymphoid development in Stat5a/b(null/null) mice having a complete deletion of the Stat5a/b gene locus. The few surviving Stat5a/b(null/null) mice lacked CD8(+) T lymphocytes. A massive reduction of CD8(+) T cells was also found in Stat5a/b(fl/fl) lck-cre transgenic animals. While gammadelta T-cell receptor-positive (gammadeltaTCR(+)) cells were expressed at normal levels in Stat5a/b(DeltaN/DeltaN) mice, they were completely absent in Stat5a/b(null/null) animals. Moreover, B-cell maturation was abrogated at the pre-pro-B-cell stage in Stat5a/b(null/null) mice, whereas Stat5a/b(DeltaN/DeltaN) B-lymphoid cells developed to the early pro-B-cell stage. In vitro assays using fetal liver-cell cultures confirmed this observation. Most strikingly, Stat5a/b(null/null) cells were resistant to transformation and leukemia development induced by Abelson oncogenes, whereas Stat5a/b(DeltaN/DeltaN)-derived cells readily transformed. These findings show distinct lymphoid defects for Stat5a/b(DeltaN/DeltaN) and Stat5a/b(null/null) mice and define a novel functional role for the N-termini of Stat5a/b in B-lymphoid transformation.